In the 1990s, India's ministry of external affairs sponsored Kuchipudi dance concerts by Raja and Radha Reddy in Maputo, the capital city of one of the poorest countries in Africa, Mozambique.

Flautist Hari Prasad Chaurasia and violinist MS Gopalakrishnan also had recitals, as part of New Delhi's soft diplomacy to engage the African nation that appeared to be hurtling once again towards a civil war; the Mozambican Civil War lasted for 15 years till 1992, and had begun in 1977, soon after gaining independence from the Portuguese.

Such perpetual strife hasn't deterred India's diplomatic efforts towards Mozambique — not after large quantities of coal and natural gas were discovered in that country in recent years. India's lines of credit to the African nation has recently been extended to $640 million (about Rs 4,000 crore), and at least three senior ministers of the ruling Congress-led United Progressive Alliance — former external affairs minister SM Krishna, coal minister Sriprakash Jaiswal and commerce minister Anand Sharma — have flown down to Maputo during the past three years.

That's not all. India's top public sector energy companies are getting ready with war chests to invest in the former Portuguese colony, where natural resources giants like Anglo-Australian metals and mining major Rio Tinto and Brazil's Vale have set up outposts, along with local private sector players like Jindal Steel & Power.

India's PSU brigade, for its part is betting big on Mozambique. Coal India, for example, has made a provision of Rs 10,000 crore for developing coal blocks in the former Portuguese colony during the 12th Five Year Plan (2012-17).

Two of India's leading energy companies, ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL), have picked up stakes in an oil consortium led by Anadarko Petroleum of the US. The ventures, cleared by the Cabinet Committee on the Economic Affairs (CCEA), will collectively cost the two PSUs $5 billion; it may well be money well spent as that investment can give them access to north Mozambique's Rovuma Basin where huge offshore deposits of natural gas were discovered recently.

No Risk, No Gain

Mozambique is not the only volatile nation that Indian companies are hunting for assets in. Conflict-ridden geographies such as Syria, Libya and Afghanistan are fast becoming investment destinations for Indian construction and energy firms.

In Libya, for example, Indian companies including OIL, Punj Lloyd and Shapoorji Pallonji & Co faced a major crisis two and half years ago when rebel forces seized the cities of Benghazi and Tripoli in a bid to overthrow Muammar Gaddafi's regime, forcing Indian authorities to evacuate 18,000 Indians living there.

Since then, about 2,000 Indians have gone back to Libya during the recent months, but if the kidnapping of Libyan prime minister, Ali Zidan, on Thursday is any indication, the North African nation is still in a phase of political turmoil (Zidan was released hours later).

If Indian companies are still undeterred by such uncertainty, it's purely because along with high risk they also see prospects for high returns — at relatively lower investment levels. "The proven areas in developed countries are very expensive.

So Indian energy companies have no other option but to hunt for cheaper assets in risky nations," says OP Rawat, secretary in the department of public enterprises, which formulates policies for PSUs. Rawat, who has been a member of a committee of secretaries (CoS) that takes calls on overseas acquisition, adds that the PSUs need to take the government's approval only if they ask for budgetary support.

For many Indian companies, be they privately or publicly owned, the challenge goes beyond just identifying a list of volatile countries and the resources therein. The bigger challenge, in fact, is how to predict the future volatility of a particular country. Till the Arab Spring uprisings surfaced almost three years ago, Syria was considered a safe destination for energy companies.

"Look at what has happened in Syria now, a country in which properties [oil assets] were once considered to be attractive. Now production has stopped, and OVL employees have returned," says Ajit K Hazarika, a former ONGC chairman. OVL is a subsidiary of ONGC and its managing director reports to the ONGC chairman. "For energy companies in particular, the mantra is high risk, high return. Geo-politically, Canada is a safe nation. [But] that is why assets there are very costly and returns are low," adds Hazarika.

Due Diligence In Afghanistan, an Indian public-private combo called Afghan Iron and Steel Consortium (AIFSCO) has perhaps taken on one of the biggest gambles in recent times. Led by Steel Authority of India Ltd (SAIL), the consortium is jointly owned by companies such as RINL, NMDC, JSW, JSPL and Monnet Ispat & Energy.